According to the Australian Taxation Office’s (ATO) Register of Foreign Ownership of Australian Assets, the number of Australian residential properties owned by Chinese investors declined by approximately 5.4% over the past financial year. Although China remains the largest foreign owner of Australian residential property, overall holdings are gradually decreasing.
In contrast, Japanese ownership of Australian residential property increased by 46%, making Japan the fifth-largest foreign residential property owner in Australia, surpassing both the United Kingdom and the United States.
So, what is driving this shift?
Economic Environment Is Encouraging Overseas Investment
For more than three decades, Japan has experienced an environment characterised by low economic growth, low inflation and exceptionally low interest rates. To stimulate the economy, the Bank of Japan maintained an ultra-loose monetary policy for many years, including a period of negative interest rates.
Although Japan ended its negative interest rate policy in 2024 and has gradually begun tightening monetary policy, the policy rate remained at approximately 1.0% as of June 2026. By comparison, Australia’s official cash rate stood at 4.35% over the same period.
The relatively low cost of borrowing in Japan continues to provide investors with access to inexpensive capital, allowing them to diversify internationally in search of stronger long-term returns. In many respects, the challenge in Japan is not a lack of capital, but a shortage of attractive domestic investment opportunities.
Population Trends Are Creating Very Different Property Fundamentals
Demographics also play a significant role in explaining the difference between the two markets.
According to Japan’s official statistics, the country’s population was approximately 123.05 million as of October 2025, a decline of around 3.1 million people since 2020, representing a 2.5% decrease. The pace of population decline continues to accelerate.
A shrinking population generally results in weaker housing demand in many regions, increasing housing vacancies and limiting long-term rental and price growth.
Australia presents a very different picture.
Australian Bureau of Statistics (ABS) data shows that Australia’s population reached approximately 27.8 million by December 2025, increasing by 412,500 people over the previous year, representing annual growth of 1.5%. Importantly, 301,000 of that increase came from net overseas migration.
For residential property markets, sustained population growth supports ongoing demand for housing, rental accommodation and urban infrastructure. These structural fundamentals are often more important to long-term investors than short-term market cycles.
Rather than simply asking whether individual property prices will rise, institutional investors are increasingly focused on whether a country will continue generating strong housing demand over the next decade.
Institutional Capital Is Increasing Its Presence
The recent increase in Japanese investment is not being driven solely by individual buyers.
In recent years, major Japanese developers, insurance companies, pension funds and real estate investment firms have expanded their presence in Australia’s residential sector.
Many have invested in residential development projects as well as Australia’s rapidly growing Build-to-Rent sector, reflecting a long-term investment strategy focused on stable rental income and capital appreciation rather than short-term price movements.
This suggests that Japanese institutional investors are investing not because they expect immediate price growth, but because they have confidence in Australia’s long-term fundamentals, including population growth, ongoing housing shortages and economic resilience.
What Does This Mean for Australia’s Property Market?
International institutional capital typically takes a long-term perspective. When large scale investors allocate capital to residential property markets, they are rarely making decisions based on expectations for the next 12 months. Instead, they are evaluating demographic trends, economic fundamentals and structural housing demand over the next decade or more.
For homebuyers and investors, this does not necessarily mean Australian property prices will rise immediately. However, it does reinforce the view that Australia’s residential market continues to be regarded by global institutional investors as an attractive long term asset class.
Disclaimer:
The information provided in this article is for general informational purposes only and reflects opinions based on current market data and publicly available sources. It does not constitute financial, legal, or investment advice. Readers should seek independent professional advice tailored to their individual circumstances before making any property or investment decisions.
